Nervous Investors Anticipate This Week’s Tide of Economic Reports

Wall Street should be somewhat volatile through the next week as various companies report first quarter earnings. Stocks rose on Friday as investors reacted to stronger than expected earnings from some companies. Several hundred more companies will be releasing their earnings reports this week as well as their expectations for the near future. Some big companies expected to report this week are Aetna, Inc., Mastercard, Metlife, Pfizer, Exxon Mobil, Sun Microsystems, Visa, and Starbucks.

Investors were surprised last week by Apple’s earnings coming in stronger than expected and Ford, while still reporting a loss, faring better than had been predicted. The Dow rose more than 119 points on Friday, helping the Dow, along with other major stock markets, recover from heavy early-week losses. Despite Friday’s rally, the Dow still finished the week down 55 points. The S&P 500 also lost, more than 3 points over the course of the week. This is normally a tense time for the market, as investors watch earnings reports and try to ascertain which direction the economy will go. This is especially true during a recession like we’re facing now. Some analysts believe that companies are intentionally setting projections low so that they will have a better chance at reaching them when earnings are announced. They fear that investors will catch on and alter their stock-buying strategies.

In the meantime, markets are anxiously awaiting more details about the government’s stress tests being given to the nation’s 19 largest banks. Bank officials were briefed by regulators Friday. The tests are supposed to determine which banks will need more government assistance. The banks will also be required to keep excess reserves of capital, forcing some banks to come up with more cash. The tests’ results will not be known until May 4, causing investor anxiety until then.

The Fed’s assessment of the economy is also expected this week, as well as its decision on whether to raise interest rates, after a meeting expected to be held Monday and Tuesday. Expectations are that they will not raise or lower interest rates. Federal Funds are already at a rate of 0-.25%, and could not go much lower. On Tuesday, the S&P/Shiller index of home prices for February will be released on Tuesday, and shortly after the Consumer Confidence Index for April will be released. On Wednesday, The Commerce Dept.’s report on first quarter gross domestic product will come out, followed Thurs. by their report on spending and personal income.

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